Why it is cheaper to outsource accounting rather than keeping it in-house. Client case
- Thanks to outsourcing, companies do not need to hire full-time employees to perform only a few tasks;
- Specialized accounting companies usually extensively use work process automation which allows reducing the use of human labor and costs.
When comparing the cost of outsourcing with the cost of full-time employees, all costs – and not just the wages of employees – should be taken into account. The costs necessary to run an accounting department include:
- Taxes and social insurance contributions;
- Vacation and sick leave payments;
- Costs for accounting department workplace (IT, office software, telephones, stationery, equipment, etc.);
- Accounting programs for accounting and reporting;
- Expenses for training of accountants – subscriptions to accounting journals, seminars on changes in legislation, sources of legal information (Consultant+, Garant, etc.) All these expenses are necessary as accounting and tax laws change constantly.
It is in fact necessary to pay 50%-70% more than the wages paid to the employees keeping accounting, and this is this amount which should be compared with the fee proposed by outsourcing firms.
When a company outsources its accounting, all the aforementioned costs are incurred by the service provider. The total payable amount is the fee specified in the contract between the company outsourcing accounting and the service provider.
Client case: cost reduction through outsourcing
In-house accounting vs outsourcing accounting
Description of company
- European FMCG company represented in 35 countries with a branch in St. Petersburg;
- Annual turnover of EUR 100 million;
- 200 people employed by the company in Russia.
Problem faced by company
The company had an in-house accounting department and faced the following difficulties:
- Financial administration costs were too high;
- Only the financial director spoke English in the entire accounting department (the accountants did not speak English), and this made the communication with headquarters difficult;
- The internal IT department was unable to provide quality support of financial processes, and this caused delays.
Solution proposed by Accountor
- 40% cost reduction through outsourcing of financial administration;
- English-speaking staff for communication with the client’s headquarters;
- High-quality IT support ensuring the relevance of accounting software and quality support of financial processes.
|Scope of work||In-house accounting department (wages + contributions to funds)||Accounting outsourced to Accountor (fee exclusive of VAT)|
|IFRS management reporting||Chief accountant||Outsourced chief accountant from Accountor|
|1,200 sales invoices per month||2 accountants||2 accountants from Accountor at the client’s office|
|600 purchase invoices per month||Banking accountant||Banking outsourcing|
|200 employees||Payroll accountant||Payroll outsourcing|
|Salary change for 50% of employees monthly||HR specialist||HR outsourcing|
|1C accounting software||2 1C programmers||1C support outsourcing|
|Total cost per month||RUB 830,000 per month||RUB 486,800 per month|
|Total cost per year||RUB 9,960,000 per year||RUB 5,841,600 per year|
How to optimize your company’s accounting costs
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